Artificial intelligence should be used in a way that benefits investors

Artificial intelligence (AI) may go a long way in helping advisors with their clients, but Canadians need to ask a lot of questions about where and how troves of personal information collected are used and whether that data benefits clients, a recent Advocis symposium heard.

“I think from a regulatory perspective … you always have to step back as advisors and consider whether or not what you’re doing is really in the interests of your client,” said James Leong, senior legal counsel with the British Columbia Securities Commission (BCSC).

“From a regulatory perspective, we also have to think about whether certain rules make a lot of sense and continue to make a lot of sense [in the future]. New circumstances or processes may not necessarily address what we were thinking of in the way we thought they would be addressed.”

Democratizing underserved markets

Leong told the symposium that AI is constantly evolving, particularly in the financial services arena. He said he sees his role in the BCSC to be one of a watchdog to see how AI really does develop and how it can be used to benefit investors. He suggested for example, that AI might help to democratize underserved markets or streamline companies’ business models.

In February 2017, the Canadian Securities Administrators (CSA) launched a regulatory sandbox aimed specifically at supporting businesses that want to use innovative products, services and applications across the country. At the same time, the CSA said the sandbox wants to make sure investors are protected.

The CSA regulatory sandbox is open to business models that are innovative from a Canadian market perspective. The CSA assesses the merits of each business model and businesses that register or receive relief may be allowed to test their products and services throughout the Canadian market.

Become familiar with the basics

With AI considered to be one of the major trends in the financial services industry, it’s everyone’s responsibility to become familiar with at least the basics, said Chadi Habib, executive vice president, information technology, Desjardins Group.

An increasing amount of information is being analyzed to help clients make investment decisions, using everything from geopolitical to scientific data, said Habib.

“It’s no longer possible for a single human being to be able to analyze all that and make a good recommendation for their customer,” he said.

However, he said Desjardins does not believe in 100% automation because all generations, from millennials to baby boomers, have indicated they want some kind of human contact to help them analyze all the information before making a major financial decision.

Leong said AI may be used to help clients understand areas like risk tolerance that will then improve the quality of advisor’s decision making.

Privacy concerns

Privacy is a big concern especially when it comes to the largest AI firms, like Facebook. “It’s time for us to start balancing the symmetry of value on how data is viewed and shared in this country,” said Habib.

“The key is: let’s ask questions and what we are giving up and most importantly is there symmetry of value being generated?”

Habib said Canadians have their heads in the sand when it comes to privacy issues.

“For us, it’s very simple: personal data belongs to you, not to anybody else. And if you decide to give it to somebody else there has to be a symmetric sharing of value.”